Lumen sells CDN customers to Akamai

Lumen is getting out of the content delivery network game and with that end in mind has announced the sale of select CDN contracts to Akamai.

The deal involves the transfer of customer contracts, but does not include any Lumen technologies or staff. The two companies will operate under a transition services agreement for 90 days, after which time Lumen plans to wind down its content delivery services business.

Lumen did not disclose the value of the deal and neither did Akamai. However, Akamai said the customer contracts it is picking up will add somewhere between $40 million and $50 million in revenue next year and will be accretive to non-GAAP earnings per share by US$0.08-$0.12.

To put that in context, Akamai booked $3.62 billion in revenue last year and Lumen Technologies $17.5 billion. This is clearly not a huge deal for either party. But it does reflect a time of change at both companies.

Business services provider Lumen came into being in its current form just three years ago, when it shed its legacy CenturyLink brand in a bid to focus on the enterprise space, looking particularly at the Internet of Things (IoT), robotics, collaboration, automation, and other new technology areas. It introduced the Quantum Fiber brand for its fibre-based connectivity services – both consumer and enterprise – and retained CenturyLink to house its legacy connectivity services, mainly copper-based DSL

But CenturyLink’s time was essentially up. It offloaded a sizeable chunk of that business for $7.5 billion to Apollo Global Management, which renamed it Brightspeed. That left Lumen free to concentrate on its enterprise business, fibre network and, until now, CDN services.

Lumen has also slimmed down from a geographic perspective. It sold off its EMEA business to rival Colt Technology Services just under a year ago, noting that the deal would strengthen its balance sheet and enable to plough more investment into that core enterprise solutions business.

“We are deep into our transformation of Lumen and much of our core work involves simplification of our business,” said Bob McCarthy, Lumen Senior Vice President, Business Development, on Tuesday. “The sale of select Lumen CDN service contracts enables us to apply even more focus on disrupting the telecommunications industry by cloudifying our network, enhancing our Quantum Fiber offering and bringing amazing new solutions to market,” he said.

“As these new customers come on to Akamai Connected Cloud, they will not only have a reliable, best-in-class delivery solution for their ongoing needs, they will also have the opportunity to tap into the full portfolio of Akamai solutions to help them power and protect their businesses into the future,” added Adam Karon, chief operating officer and general manager of the Cloud Technology Group, Akamai.

The deal is not the first for Akamai in the consolidating CDN space. As recently as late August it announced the acquisition – again for an undisclosed sum – of select enterprise customer contracts from StackPath, following latter’s decision to close down its content delivery network operations. It picked up around 100 contracts in total worth approximately $20 million in annual revenue. Just like the Lumen deal, there was no transfer of tech or personnel, and two companies committed to working together for a transition period.

Akamai is clearly keen to build up its customer base and as such further deals are clearly not off the table. Meanwhile, Lumen continues to reshape itself, a process that may or may not be complete. We could hear from either or both again in the near future.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.